Finance Minister Nirmala Sitharaman on Friday called upon the Central Board of Direct Taxes (CBDT) to take concerted action to reduce the high number of pending tax appeals. While a lot of work has been done to reduce litigation and simplify processes for the taxpayer, much more needs to be done, she said.
“Total pendency declined by over 34,000 cases to now 5.4 lakh appeals. No good,” Sitharaman said. “I would have thought the pending appeals would have come down to less than 1 lakh. We still have 5.4 lakh appeals,” the minister said at an event commemorating the 167th Income Tax Day here.
While pending appeals are being disposed of quicker than earlier, the number of new appeals keeps mounting, Sitharaman said.
“I appeal to the CBDT that you should have one more review to see how you are going to handle this. It cannot be that the cases keep mounting…it will take a century to clear it if you are allowing the growth to go on like this of complaints and your reduction is not matching it, Sitharaman said.
“Somewhere the taxpayer is left with a bitter taste in its mouth when we slightly exert that empowerment the tax law has given us,” she said.
The finance minister asked the tax department to use the power under the law with a sense of humility.
She asked the tax department to undertake a balanced approach in dealing with taxpayers who are deliberately evading tax and those committing bona fide errors.
Sitharaman also outlined five priorities for the Income Tax Department—recognise, respond, redress, reflect, and reform.
The tax department must recognise every taxpayer’s concern promptly, respond with clarity, courtesy and empathy, redress genuine grievances fairly and within defined timelines, reflect on the root causes of recurring grievances, and reform the processes, Sitharaman said.
The responsibility of the Income Tax Department has widened from a narrow focus on tax collection to a broader commitment to fairness, efficiency, ease of doing business and service, Sitharaman said.
The implementation of the Income Tax Act, 2025 has simplified the law by reducing uncertainty and lowering compliance costs.
The e-Filing portal significantly strengthened this filing season with the portal handling more than 1 crore taxpayer interactions in a single day, with daily interactions reaching around 1.6 crore at peak.
As on July 21, more than 3.2 crore Income Tax Returns were filed for Assessment Year 2026-27 (FY26), nearly 94% verified, and 60% processed, Sitharaman said.
On this, over 1.3 crore refund claims have been received, 96% verified and 40% processed. The tax department must continue reducing processing timelines, Sitharaman said.
The finance minister said tax certainty is one of the strongest foundations of voluntary compliance. Our long-term objective must shift from ‘litigation management’ to ‘litigation prevention’, she said.
Disclaimer: This article is for informational purposes only and should not be construed as tax, legal, or investment advice. Tax rules, disclosure schemes, and government notifications, including FAST-DS 2026, are subject to change based on official gazette notifications. Readers are advised to consult a qualified tax professional or chartered accountant and refer to official Income Tax Department communications before making any compliance or disclosure decisions.
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